Online Retailing Paired with Kirana—A Formidable Combination for Emerging Markets

Digitalization of Small Retail Stores - Challenges in Digital Payments

“…By providing food grains to rural and urban poor at government subsidized prices, some of these small retail stores play an important social role in the government poverty alleviation and social development programs. Next to agriculture, this sub-set of the retail sector in India employs 12 million people and contributes to 12% of GDP [9]. Despite urbanization and the advent of supermarket chains and online retailers, these small retail stores control 98% of the grocery retail market in India [11].…”

Adoption of Digital Payments by Small Retail Stores

“…These are significant, given that India has the highest retail density in the world with one retail store per 100 people (Kalhan and Franz 2009). Next to agriculture, this subset of the retail sector in India employs 12 million people and contributes to 12% of GDP (Sinha et al 2015). Despite urbanization and the advent of supermarket chains and online retailers, these small retail stores still control 98% of the grocery retail market in India (KIE 2016).…”

“…Despite urbanization and the advent of supermarket chains and online retailers, these small retail stores still control 98% of the grocery retail market in India (KIE 2016). The traditional business model of these small stores typically relies on low capital investment, family ownership (Yun et al 2012), low margins (Rani 2013), low value but frequent purchases by customers, heavy dependence on cash-based transactions, easy credit terms to customers (Yun et al 2012), and localization of the merchandise based on ethnicity, home delivery and personalized service (Sinha et al 2015). Characterized by low levels of technical and accounting standardization (Maruyama and Trung 2007), these stores operate more like a small supermarket and compete by meeting the needs of the local community with their unique service characteristics (Sinha et al 2015).…”

“…These small retail stores are vulnerable to changes in the retail eco-system because of their heavy dependence on cash and credit-based transactions, low value transactions, poor or informal accounting and management processes (Sinha et al 2015). Further historically they have a basic rudimentary infrastructure and low levels of adoption of technologies and therefore are vulnerable to the disruptive trends in the sector (Sinha et al 2015). Governments are also encouraging the adoption of digital technologies, including cashless transactions and digitized processes in the retail sector, to counter the black economy and tax net.…”

“…Although digital and mobile technologies are widely deployed in the retail sector, their uptake by the small retail stores, termed as 'kirana' stores in India is relatively slow. Next to agriculture, this sub-set of retail sector in India employs about 12 million people and contributes to 12% of GDP (Sinha et al 2015). Despite urbanization and the advent of supermarket chains and online retailers, these small retail stores still control 98% of the grocery retail market in India (KIE 2016).…”